Sony Ericsson Mobile Communications Q4 2007 Earnings Call Transcript

| About: Sony Corporation (SNE)

Sony Ericsson Mobile Communications (NYSE:SNE)

Q4 2007 Earnings Call

January 16, 2008, 3:30 AM ET

Executives

Hideki Komiyama - President

Ulf Lilja - CFO

Anders Runevad - EVP and Head of Sales

Analysts

Tim Boddy - Goldman Sachs

Alexandre Peterc - Exane/BNP Paribas

Kulbinder Garcha - CSFB

James Faucette - Pacific Crest Securities

Rod Hall - JP Morgan

Mats Nystr�m - SEB Enskilda

Unidentified Company Representative

Thank you operator. Hello everyone. Good morning, good afternoon. Welcome to the Sony Ericsson call today. With me here today, in London; is Dick Komiyama, President of Sony Ericsson Mobile Communications; Anders Runevad, Executive Vice President and Head of Sales; and Ulf Lilja, Chief Financial Officer.

We will be making forward-looking statements during the call today and these statements are based on our current expectations and certain planning assumptions which are subject to risks and uncertainties. The actual results may differ materially due to factors mentioned in today's press release and discussed in this conference call. We therefore encourage you to read about these risks and uncertainties in our earnings reports.

And with that out of the way, I would like to now hand the call over to Dick Komiyama. Dick.

Hideki Komiyama - President

Hello, this is Dick Komiyama. It's nice to be with you, and I am looking for meeting many of you in person in the coming months. Today I want to share with you the highlight of the last quarter and summarize our business performance in the last 12 months. First let me give you a few highlights for the Q4.

The Company continue to grow faster than the market during the quarter, setting the quarter just under the 33 million units, which represents 18 partner gross on the... in the year ago. We capture the market share in number of key markets such as Americas, Eastern and Western Europe and the internally calculate the market share stands around slightly over a 9%. This is based on the quarter global market for the quarter of 328 million units.

We continue to invest for the future in order to expand the portfolio, so further in 2008, this means expanding downwards the lower price points and also upward with more high and 3G multimedia devices.

If we take a look at the Q4 in relation to the full year we can see the steadily increasing volume over the quarters and the ability to hold the margins in low double digit, while ASP decreased along 16% over the 12 months. This illustrate the management's commitment to grow market share in a profitable way and not sacrifice margins for the quick and unsustainable growth.

Looking at the full year result of Sony Ericsson, sold over a 100 million units during the year; our first, in the Company's six years history. We grew around 38% on an annual basis which is over double the global market growth rate.

2007 so as of further build our position as a broader portfolio players with a greater proportion of mid-tier products in our product mix. Our facts reflected and the reduction in ASP during the year. We continue to be the industrial leader in the music phone in 2007 and have sold over 145 million music enable phone to-date of which 52 million were Walkman brand phones. Those are the cumulative numbers and we sold around 12 million Walkman phones in Q4 alone.

Let's take a quick look at how the company has grown since 2002, where we look at the result from the beginning of the joint venture, it's clear to see the company has now established a considerable momentum. We have studied as many as... as many of you know loosing the money that has managed to establish our sales over the past three years as the Company's that committed to becoming a top three industry player.

The telecom sector continued to be the highly dynamic industry, which we believe will grow along 14% last year. We estimate market in 2007 to have been over 1.1 billion unit which was in line with our expectation.

Looking forward on the coming 12 months, we start the year feeling slightly cautious about the future growth especially with economic slowdown and a credit crunch in the United States and European market. However, we are cautiously optimistic. We still see the global handset market continue to grow at around 10% in 2008 though the business conditions will become harder.

Now, I would like to touch on a few key milestones for Sony Ericsson's during the quarter. We have announced a number of new and very exciting products. The K660 and the K630 which are the HSDPA phones optimized for the mobile web when targeted at the mainstream consumer audience and the other targeted at the younger already adopted demographic. We continue to expand and reach the walkman experience with both new high-end mid-tier model plus added to a exciting line of accessory which really bringing a product, a proposition to life for the consumer.

Another exciting development during the quarter was our agreement with Motorola. That's all that [ph] invest in 50% of UIQ. This has now been ratified by the Compensation Authority.

During Q4, Sony Ericsson has announced its intention to unify and consolidate its various content offering under the existing PlayNow download service. For those of you who don't know the PlayNow, is a Sony Ericsson's existing content download offering which started way back in 2004 with polyphonic ring tones and has been expanded gradually since then.

In November, we announced our aim to offer the consumers an open experience based area of content including full track music, games and wallpaper etcetera. As dual download through both, Sony Ericsson phones and PCs as well as all MP3 and Windows Media compatible devices. The low level of this new in house PlayNow service will start in Q2 in 2008.

Let me talk about a couple of areas where we believe that a shift in the technology plays the unique strength of the Sony Ericsson. In the more developed market, the accelerated transition to 3G and superpower [ph] 3G or HSDPA we believe enable us to grow market shares in high-end devices where Sony Ericsson has always been strong. We currently enjoy and double the market shares in the 3G devices that we do provide and have established ourselves as one of the leaders in the rapidly growing area of the market.

We believe we have ability to retain this advantage going forward with the best-in-class applications and handset design. Many of the forms we announced for the second half of 2007 were HSDPA models, packed with the exciting features that takes full advantage of increased data speed. As faster the data speed enables networks operation to further true mobile web experience the area of service and application on the handset will definitively grow an importance for consumers.

This is an area where the Sony Ericsson has always excelled and we believe we'll play our strengths in the future. Many of the high-end HSDPA products such as W760 Walkman phone, we recently announced at the Consumer Electronic Show in Las Vegas. All this show the possibility of what Sony Ericsson can offer in this area a music phone that fully mobile web enabler plus offer the consumers the most advanced Sony Ericsson gaming experience to-date.

Before I hand over to Ulf Lilja, our CFO, who will give you some more details on the numbers for the quarters and the full year, I would like to point out that we are already getting prepared for busiest Q1 ever. As some of you will be aware we have already announced three new phone plus accessories at Consumer Electronic shows in the United States and are planning to pull this time a preannouncement and especially even before end of the quarter.

We will be in India next week holding a press conference in Delhi to give an update on our business in their market and Asia Pacific region. On the 27th, this month, we will be at MIDEM, the world's largest music industry trade show in France [ph] to give a further update on our plans for the rollout of the PlayNow content [ph]. And then on Sunday, February 10th, we'll hold the biggest press and analyst event of the year [ph] in Barcelona to kick off the 2008 Mobile World Congress. I hope you will all join us for that event as it is going to be the best party in the town.

And now, I am going to pass over to Ulf, and look forward to answering your questions in a few moments, Ulf.

Ulf Lilja - Chief Financial Officer

Thank you Dick and good morning everyone. I will start walking you through some of our numbers. I will start with forth quarter, units shipped became 30.8 million units in the quarter, up 18%, compared to last year. Net sales flat versus last year it's �3.771 billion, but up 21% versus previous quarter.

Gross margin increased to 38.8% versus 29% a year ago, and 30.7% the previous quarter. Operating margin increased to 13% versus 12.8% a year ago, 12.7% previous quarter.

Net income... excuse me, income before tax �501 million flat versus last year, however, up 30%, compared to previous quarter. Net income down to �373 million, compared to last year's �447 million. However, we should then point out that the tax rate 2006 was impacted by a release of our valuation allowances for our businesses in the U.S. and Japan, leading to a very low tax rate of 8% versus 24% in this quarter more in line with our typical tax rate. ASP �123 versus �146 a year ago, up from �120 previous quarter.

If I may turn to the full year number, unit shipped passed 100 million units, as Dick mentioned, for the first time in the Company's history, that's up 38% versus last year. Net sales rose to �12.916 billion, which is up 18% from the last year. Also gross margin increased to 30.6% from 21... 29.1% a year ago. Operating margin, up to 11.9% versus 11.5% a year ago. Income before tax became �1.574 billion, up 21% versus last year's �1.298 billion, net income up 12% to �1.114 billion. Let me also here mention that the tax rate last year was favorably impacted by the previously mentioned release of tax valuation allowances, tax rate last year 21%, this year the more typical 27%.

ASP declined to �125 per unit, compared to �146 a year ago. That concludes my presentation. Thank you.

Unidentified Company Representative

Thank you Ulf. Operator, we are now ready to open the Q&A session, please.

Question And Answer

Operator

Thank you, sir. Ladies and gentlemen, at this time we will begin the question-and-answer session. [Operator Instructions]. As always please limit yourself to one question at a time and please keep your questions at a broad level. Detailed information is provided in the reports and Sony Ericsson's Corporate Communications team will be happy to take additional questions and discuss further details with you after the call.

Our first question today will come from Ian Krippenberg with Jiagen Snajer [ph]. Please go ahead.

Unidentified Analyst

Yes, hello sir. I have seen that Sony Ericsson is focusing on North American as one of the most important market this coming year and the same kind of message has come from Nokia as well. Can you develop how you look at the competition in North America and other markets in the near future?

Hideki Komiyama - President

Okay. This is Dick Komiyama and I think as you know Sony Ericsson has been holding rather strong market share for many years in Western Europe and Eastern Europe as well as Middle East and... but U.S. market has been one of the weak area that we had. But as we, for the past two years, we diligently develop the relationship with operators and also develop the product for U.S. consumer need and I think under all the preparations to launch our U.S. business is going to be ready and which we have already kicked up at the meet at CES in Las Vegas this early part of the month.

And we are very pleased that reactions and product portfolio were well accepted, and therefore, I think we believe will be starting right place. But in the meantime this product is going to be delivered in 12 more on the second half and I think we are going to plan to have market promotions and as well as more on the product awareness campaign, brand awareness campaign and strengthen overall Sony Ericsson's market position.

That's our plan, but I know that main competition is... U.S is one of the most competitive market, but we think we already pull that.

Unidentified Analyst

Okay. You also mentioned... in your speech you said that business condition will become harder. Can you also develop that what does that mean more specific?

Hideki Komiyama - President

Well I think in general, as I said, that handset market will continue to grow, but yes, certainly there is a global economic concerns including a time plan rate issues in the U.S. and Western Europe and this was wide spreading and also at the cost that we were aware as energy cost is going high and there is a distinctively uncertain economic conditions ahead. And whereas, we are going through this, we have to anticipate that business condition is going to be harder. But yet we are of course prepared for this stormy climate ahead and we will try our best, but just in any type [ph] we'll be affected one way or another, with this economic climate.

Unidentified Analyst

Okay, thank you very much.

Operator

Thank you. We'll take our next question today from Tim Boddy with Goldman Sachs. Please go ahead.

Tim Boddy - Goldman Sachs

Yes. It's Tim Boddy from Goldman Sachs. Thanks for the question. I'd like to ask about market share in two directions; on the high-end, clearly, you do have a very strong position. But particularly in music we are seeing increasing competition. I wonder if you could comment on how you see that dynamic playing out in the market?

And on the low end it seems perhaps you are shaking in the fourth quarter was more modest than people have been anticipating. Can you talk about the progress you are making in getting shares in the lower and the low to mid-ends of the market? Thanks.

Anders Runevad - Executive Vice President and Head of Sales

It is Anders Runevad. Let me start down with the high-end and your question on music. I mean in fourth quarter, we are growing faster than the market, we have our feeling definitely that we maintain our leadership in the music area. We have them actually increased ASP a bit in the fourth quarter. So much due to our flagship Walkman phone. So we feel confident in the music segment and of course as you say the competition is tough, but I will say that the competition is hard in all segment of this market. It is very competitive industry in both high, mid and low-end.

Looking at the low-end price segment, we maintain our strategy that we talked about before that is a profitable growth where we have taken several steps this year to enhance our portfolio, increase our breadth of our portfolio into the low-end segment of the market. And at the same time, for that segment, our overall strategy remains as we address this in a profitable way and we take those steps to introduce products at lower and lower price points and will maintain margins.

Hideki Komiyama - President

Well just let me add one more comment. As you know, the Walkman brand, I believe is revitalized under the Sony Ericsson's and mobile phones and however in order to enhance the benefit of the music phone we are preparing also... or maybe I would say differentiating ourselves in a way of providing more different features and including like integrated application of the future core Track IDs, [indiscernible] unified-media, all this new features and grouping to be... our form will help or make it easy for end user to use this form. And plus, as I mentioned, a PlayNow is going to be at the service and that will also enhance overall music entertainment, easier for consumer and I think this would be a strategy that we are pursuing for that category.

Tim Boddy - Goldman Sachs

Just to clarify, there is no particular reason why you didn't gain more share in the fourth quarter, as you have been doing in previous quarters?

Hideki Komiyama - President

No.

Tim Boddy - Goldman Sachs

Okay. Thanks.

Operator

Thank you. Our next question today comes from Alexandre Peterc with Exane/BNP Paribas. Please go ahead.

Alexandre Peterc - Exane/BNP Paribas

Hi good morning and thank you for taking my question. I would like to shift a little bit to the geographic distribution of your sales. Apparently, if I am making it correct, growth has slowed down significantly in Asia with coming from plus 35 in Q1 to minus 18 in Q4. Also Europe and Eastern Africa is down in terms of growth as well. Americas is holding up kind of well. It appears to me that there has been indeed a shift in Q4 from the expansion into more low-end in emerging markets, and the higher has been favored that's probably also reflecting in your growth margins. Now how do you reconcile that with your overall strategy for the longer term? Those are the two questions I have here. Thank you.

Anders Runevad - Executive Vice President and Head of Sales

Okay. Let's start with your growth, if you look at from Q3 to Q4 we have a solid growth in all the three regions, in Europe, Middle East and Africa, sort of 1% in Americas, and Asia on 8%. And so, I will say that all growth was in market share and volume this [ph] year spread. If we compare them a year ago quarter-on-quarter as you consolidate [ph] them we have a decline in Asia as compared to Q4 last year. That is very much due to some different reason, those of all imposed on Asia you have seen a distraction in the market due to political and risk, for example, in Pakistan where we see the whole market detracting. We also have as we reported last quarter lost a bit of momentum in Japan and China. So that is in line with what we reported in Q3.

Japan and China obviously two very different market, Japan a highly mature market where we also seen new kind of the subscription packages being introduced from the operators into the market and that has the influence all the same. In China, we have lot of this momentum, as I said already, in Q3, we have addressed issues both in Japan and China and we have... we are confident that we have the pressurized [ph] actions in place to address this now overtime.

Alexandre Peterc - Exane/BNP Paribas

Okay thank you. Again just some... and I have a very quick follow up regarding guidance, plus 10% for next year against the backdrop of an economic slowdown. I don't quite understand whether your forecast already includes the risk of a slowdown in the U.S. under it's implications to the pay crunch, or are you just saying that those are high risks for the plus 10% forecast?

Unidentified Company Representative

I am sorry could we hear the question again please. It didn't come very clearly.

Alexandre Peterc - Exane/BNP Paribas

Okay I will try again.

Unidentified Company Representative

If you could speak a little bit louder as well it would help, thank you.

Alexandre Peterc - Exane/BNP Paribas

Yes I would just like to find out whether your plus 10% forecast for the market already includes the risk of a market slowdown or are you just saying that this prediction is a drift given the macroeconomic environment? Thank you.

Hideki Komiyama - President

It's certainly at the normal conditions. It could be slightly higher than what we have projected at this moment and therefore we are anticipating this percentage including this economic slowdown because of the general growth momentum of this handset industry, but as again, this is depending on how severely that economy kind of coming and if situation is much different or let me say worse then it may effect. We may have to revise this forecast in the upcoming quarter, but today at this stage we'll attain this despite all this anticipation of the future economic prospect.

Alexandre Peterc - Exane/BNP Paribas

Okay. Thank you very much

Operator

Thank you. We will take our next question today from Peter Janesio [ph] with Morgan Stanley. Please go ahead.

Unidentified Analyst

Thank you. Just to clarify and apologies for another macroeconomic question, you have talked about your assessment in terms of the macroeconomic impact in 2008. My question is that, have you seen any impact so far on the back of macroeconomic issues be it in the U.S. or the U.K. or Europe, in general. In Europe, business where the handset market in Q4 or so far in January?

Unidentified Company Representative

No, we haven't really, I mean, we of course as you have talked [ph] Q4... and Q4, the overall market in Q2 is very much equivalent to our expectations. And that also landed... that's also global market that we have said during the year on �1.1 billion plus very much in line with our expectation.

Unidentified Analyst

And just as a follow up on that, on the back of your concerns on the macro economy. Do you expect any change in the subsidiary policy of Telcos here in Europe or in the U.S.?

Unidentified Company Representative

I think... I mean, of course this is a very dynamic industry and I think its not really for us to speculate what operators will do, so I think that question is probably much more relevant for them.

Unidentified Analyst

Okay thank you.

Operator

Thank you. Our next question today comes from Kulbinder Garcha with Credit Suisse. Please go ahead.

Kulbinder Garcha - CSFB

Thank you. Just a couple of brief questions, first of all, in the fourth quarter these are the industry unit number, according to your estimates was 328 million and just on your estimates what consequential growth to the industry due in Q4? Then my second question is, when I look at your operating margins you have done better then the number two and number three player for the last several quarters now and on top of that since you are embarking on more aggressive expansion in North America as well as possibly India as well. So I am kind of wondering about sustainability of Sony Ericsson's margins as we go up to 2008. Do you think you might see some pressure as you are try grow out the business or do you see you can replicate the success that you had in 2007 of taking some share and expanding the portfolio but sustaining double digit margins? Many thanks.

Hideki Komiyama - President

Well, the as you have seen that our growth history starting 2002 we are building momentum, but yet we are deliberately careful about where we are going to strengthen our positioning not only the portfolio and sometime features and sometime regions. And looking ahead... whereas as you can see our margin has been stable and a little [ph] improvement, this is due to because a lot of effort on making operation efficient and also cost cutting effort and which despite the fact that ASP not only because of the expanding lower pricing market, but sometime because of the new forms are coming up and all this area we have been working in terms of competitiveness of the product.

And so, as a result we are holding up on margin despite as ASP are priced down and we intently do that and simply because of all supply change use and production issues and product planning issues and all this make it most competitive. Therefore, we are going to expand this lower price area. But yet we are determined to hold our margins because of this product overall increase.

Kulbinder Garcha - CSFB

Thank you. And the question on the handset industry in Q4. The 328 million, is that what kind of a sequential growth is that do you think?

Unidentified Company Representative

We estimate it to be about 16%.

Kulbinder Garcha - CSFB

16?

Unidentified Company Representative

Yes.

Kulbinder Garcha - CSFB

Okay, great. Thank you.

Operator

Thank you. We will move now to a question from James Faucette with Pacific Crest. Please go ahead.

James Faucette - Pacific Crest Securities

Thank you very much for taking my question. I just wanted to go back to kind of your current outlook on the industry and if you can comment on how you are seeing inventory levels both for your own products, maybe for the industry particularly in the western hemisphere countries as we come out of the traditionally strong holiday sales period?

Anders Runevad - Executive Vice President and Head of Sales

I mean we don't inventory situation as we can see it today basically one normal level of... also Christmas, I mean that's what we see today. We of course just finishing Q4 and of course now take the next step looking forward. But that we don't see any normal seasonality at this point in time.

James Faucette - Pacific Crest Securities

I'm sorry can you repeat that again. Do you see normal seasonality or you do not?

Anders Runevad - Executive Vice President and Head of Sales

We do not see any thing that is not normal seasonality.

James Faucette - Pacific Crest Securities

That's very helpful, thank you very much.

Anders Runevad - Executive Vice President and Head of Sales

Of course we see as Ulf pointed out as well of course we see a normal seasonality passed that we have over Christmas, but we don't see anything that is not normal for this kind of seasonality.

James Faucette - Pacific Crest Securities

That's great, thank you.

Operator

We move now to Jason Maursea with SAP [ph]. Please go ahead.

Unidentified Analyst

Yes thanks. Just curious if you were able to book the UIQ gain this quarter as this was the �15 million gain in other income?

Ulf Lilja - Chief Financial Officer

I would say yes that is correct the transaction was approved by all authorities before we closed the books. So that is correct �150 million is recorded in the quarter.

Unidentified Analyst

What was the final amount that in the cash flow statement?

Ulf Lilja - Chief Financial Officer

That was around �25 million.

Unidentified Analyst

Great. And if I could just ask another quick one you announced PlayNow for back in November. Any update on any operators that maybe seeking or distributing service at the moment?

Hideki Komiyama - President

Well no, but we are going to make a call [ph] that is our plan in the future at the medical [ph]. And that's why we are going to talk about later part of this at MIDEM and together with in Barcelona. We are working on many, many business development stage and I think we can be a full [ph] calculation to talk about in this MIDEM conference.

Anders Runevad - Executive Vice President and Head of Sales

And I think that's of course we have had to PlayNow in 2004, therefore and we have constantly developed PlayNow and we already today have around 75 commercial agreements around PlayNow services and several of those we had operated.

Unidentified Analyst

Okay. I was more curious about the full PlayNow service would be game downloads in the performance tracks etcetera?

Anders Runevad - Executive Vice President and Head of Sales

I think that we have to... as Dick said come back at the next year end.

Unidentified Analyst

Okay. Great, thank you very much.

Operator

Our next question today comes from Rod Hall with JP Morgan. Please go ahead.

Rod Hall - JP Morgan

Yes, good morning. Thanks for taking my question. Just a quick one on the weakness in Asia, the 18% year-on-year decline, you said, you gave two reasons for that one was Pakistani political unrest. And the second was the momentum loss in Japan and China. I wonder if you could elaborate a little bit on just how important the Pakistani political unrest was within that, I mean, can you give us any kind of idea how big the impact from that was proportionately on that 18% year-on-year decline, that's my first question.

And then the second question is related to the home multimedia strategy and I am hoping that may be coming [indiscernible] since you are new to the business you can give us some idea of how you are thinking about this. Apple clearly moving very aggressively now into video and already pretty strong in music. How important do you think video is for your offering going forward? Also how important do you believe it is to be able to distribute the content around the home, which Apple is moving pretty aggressively on as well with various hardware products?

Anders Runevad - Executive Vice President and Head of Sales

Now, let me take the first question, we don't break down our numbers further then the regional breakdown that we would provide. So I can't give additional insight for you there. It's of course so that in the Pakistan case it's a total market that detracts substantially because seeing the retail activities are obviously a lot lower today. But we don't break down our geographical markets further than we have done in the reports.

Rod Hall - JP Morgan

Okay. I guess I was just trying to get an idea whether it is a small impact or relatively significant?

Hideki Komiyama - President

Well, about this new features and although you quoted as Apple we certainly, as I mentioned, before this year we want to focus much on the music aspect, but yes, in Japan introduced the Bravia Phone and that's although it's unique in the Japanese market but that's can receive... can see the television digital TV here in Japan [ph]. But in the mean time that, this area consumer... Sony is consumer operation as well as the market for the consumer is budging. And many of the features and as well as we are together with our phone capability is going to be important one and therefore video aspect is important strategy.

Although, as I mentioned, that we are going to focus on more music side this year but naturally many of the Sony's assets or the technology available for games and videos and those are the next of course agenda which we have in or lacking on although I cannot go more specific. But the measure, because of this consumers aspect and those things are the important. And as to... but another important is I think area of how user interface and also... therefore we are trying to make it the best user experience and... which also we think the important that we work closely as operators together. And so this operator integrated customized experience as well as the new features and as well as our new technologies of the 3G and all this combined we are estimating more good packages of the, entertainment aspect for this new phone features.

Unidentified Company Representative

Operator --

Rod Hall - JP Morgan

Okay. Thank you.

Unidentified Company Representative

Operator we like to take one last question, please.

Operator

: Thank you sir. Our final question today will come from Mats Nystr�m with SEB Enskilda. Please go ahead.

Mats Nystr�m - SEB Enskilda

Yes. Good morning. Following up on Asia Pacific if I may, is it possible to quantify how large Japan was in terms of sales? And secondly, I know you don't really have an entry in products yet before the session [ph] corporation etcetera. But is it also possible to give us some... shed some light of the, let's call it low-end share of volumes? Thank you.

Unidentified Company Representative

No. Unfortunately, we have said this several times, we don't break our numbers down further and the regional breakdown. We are done and we don't really go down to specify market share into different price stand of the portfolio. So I can't help you more there. We are basically following the strategy that we have done during the year also in Q4. We are continuously expanding into lower price segment phones. We talked about bringing Walkman down to under a �100 actually already in Q2. We have done that. We have expanded our talk in text capability of the portfolio into lower price segment phone.

And I think that's clearly shown that over the year all ASP has come down which of course is very much a function of the portfolio, and the different segments as we addressed in the portfolio. And we continue to follow our strategies to do it step-by-step, and to grow market share in the profitable way. So we have no changes in that overall strategy that we have... that we have executed on during the year.

Mats Nystr�m - SEB Enskilda

And finally, if I may excluding Pakistan, Japan and China which you have elaborated on, are you satisfied with how sales in rest of Asia Pacific has developed? Thank you.

Unidentified Company Representative

Yes, we are, I mean, Asia Pacific is of course a huge variety of markets and we are happy with the performance... with our performance in Asia Pacific.

Mats Nystr�m - SEB Enskilda

Thank you very much.

Unidentified Company Representative

Ladies and gentlemen thank you for your questions and for participating in today's call. If you have any additional questions please contact Sony Ericsson or the Sony or Ericsson investor relation/analyst relations team. Thank you very much and enjoy the rest of the day.

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